Quality cotton demand high, price lags

Harry Cline Farm Press Editorial Staff | Oct 15, 2005

Growing world demand for quality cotton is what the doctor ordered for California and Arizona producers. However, a seemingly incurably ill cotton market is not enough incentive to follow the doctor's orders.

“It's unfortunate that we are cutting back our acreage as world cotton demand is running at record levels,” said Calcot president Bob Norris at the cooperative's 78th annual meetings recently. Cottons produced by California and Arizona producers “are in relatively scarce supply but obviously, if we can't get prices for them that make financial sense to you (growers), that's going to have an effect on your willingness to produce them.”

This Catch 22 scenario was detailed by Norris at the annual meeting where excellent settlement prices were announced for the slightly more than 1 million bales of 2004-05 cotton Calcot marketed for $400 million during the 2004-05 season.

In passing out final settlement checks totaling $36.4 million to about 1,400 California and Arizona producers for last year's crop, the final San Joaquin Valley Acala price reached 77.20 cents per pound. This only ranks eighth in final Acala settlement prices since the 1992-93 season, however, it came in a year when the average yield of more than 1,500 pounds per acre shattered the old California record. Arizona also set a new yield average, 1,451 pounds per acre. Four- and even five-bale cotton yields were common in '04. It also was a relatively inexpensive crop to produce.

Highest ever paid

Calcot's seasonal pool SJV Pima price, $137.50, was the highest ever paid by the cooperative and it came on an average yield in California topping 1,400 pounds.

For other styles, the final settlement for California Uplands was 73 cents while roller ginned Ultima settled at $89.20. For desert growths, seasonal pool uplands comparable to SJV uplands the final price was 70.40. The final settlement price for Desert Pima was $135.90.

The only downside to the ‘04 SJV crop was fall rains that lowered crop quality. “Higher grades were very much in demand, but we simply didn't have as much as we wanted. If we had not had the rains, I suspect we would have been sold out by January.”

Government farm program benefits “played a key role in achieving” the good final prices, said Norris.

“A good solid farm bill based on sound government policy is critical to America's interest and all its citizens,” said Norris.

Hanging on to this policy in the 2007 farm bill will be more difficult than ever, he added.

Norris, whose ag marketing career spans 36 years at Calcot, cannot recall a time when there has been “so much opposition to, and criticism of, the U.S. farm program.” He said American agriculture is on the defensive and must work hard to convince not only Congress, but also the public that preservation of the U.S. farm program is good for America.

Kern County, Calif. producer and Calcot's board chairman, Charles Fanucchi, was more blunt. Dismantling the current federal farm with the '07 farm bill “may be beginning of end for production agriculture in the U.S. — not just cotton, but every crop is in jeopardy.”

Call for support

Fanucchi and Norris called for unrelenting political action by all growers in support of the National Cotton Council to win a continuation of the current farm program.

“We have a good farm bill. It offers a safety net for producers. It is good for the consumer and it is easy on the taxpayer. It really works, yet everyone is shooting at it,” said Fanucchi. “The U.S. produces the cheapest and safest food and fiber in the world.”

The political battle is being made more one-sided with the growing cost of government made more deficit-laden by hurricanes Katrina and Rita and the war in Iraq.

Norris begged Congress and the administration to weigh “very carefully” any attempt to eliminate or cut to the bone the farm program “Agriculture is willing do to its share to reduce the budget deficit, but it's bad policy for Americans to allow the farm bill to be gutted.”

In the field, Norris expects California and Arizona cotton acreage to continue declining largely due to urbanization and shifts to other, more financially attractive crops like almonds. He joined the growing throng saying SJV cotton acreage could be dominated by Pima due to strong prices for the Extra Long Staple crop as well as uncertainty over the upland farm program. Pima cotton only has a federal loan and a market competitiveness program. At a recent California Planting Cotton Seed Distributors (CPCSD) meeting, the seed company issued a prediction of almost 300,000 acres of Pima next season in the San Joaquin. That may a bit high for 2006, said Norris, but he does not dispute those who say Pima will exceed Acala/Upland in the San Joaquin Valley for the first time next season.

Getting this year's SJV crop into the modules will be a challenge. A late spring will delay the harvest, and a July hot spell reduced yields. The heat also made the plants go vegetative. It has been an expensive crop in some areas. Fanucchi said he has spent as much as $200 per acre to control pests in some fields.

However, Fanucchi and Norris say American farmers face a far bigger challenge than that in turning back the politicians who want to dismantle American agriculture.